The impact of Part 36 and negotiated settlements on the time for bringing contribution claims - DAC Beachcroft

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The impact of Part 36 and negotiated settlements on the time for bringing contribution claims

Published 5 December 2014

The question of when limitation starts to run for a contribution claim under the Civil Liability (Contribution) Act 1978 after a claim has settled by acceptance of a part 36 offer was considered by the Court of Appeal in Chief Constable of Hampshire Constabulary v Southampton City Council, the judgment in which was handed down on 1 December 2014.

 The claimant police force settled the mesothelioma claim of an officer through making a part 36 offer on 8 October 2010 which was accepted on 4 November. The settlement was recorded in a consent order dated 15 December 2010 which provided for the costs to be assessed in default of agreement. The costs were subsequently agreed and the amount was recorded in an order dated 15 September 2011.

The police force sought a contribution from the defendant local authority and, having failed to reach agreement, commenced proceedings against the local authority on 3 December 2012. The local authority raised limitation in its defence, a district judge found that the claim was statute barred and the police force appealed this decision to the Court of Appeal. 

The limitation period for contribution claims is governed by s10 Limitation Act 1980 which refers to a period of 2 years from the date on which any judgment is given in civil proceedings or, in the absence of a judgment, the earliest date on which 'the amount to be paid' is agreed. The police force argued that the consent order dated 15 December 2010 was a judgment and, if this was not the case, that 'the amount to be paid' covered costs as well as damages. 

Lord Justice Jackson, delivering the lead judgment, concluded that (a) the claim had been settled by the machinery of part 36, (b) the consent order dated 15 December 2010 was not a judgment and (c) on a proper construction of s10, 'the amount to be paid' concerned the amount of damages alone. Accordingly, the limitation period started on 4 November 2010 and the proceedings commenced on 3 December 2012 were statute-barred. 

This case serves as a salutary reminder to all compensators that, in the absence of a formal judgment, the 2 year limitation period for contribution claims starts to run from the earliest date on which the amount of damages is agreed. Whilst an obiter indication in Mr Justice Crane's decision in Knight v Rochdale Healthcare NHS Trust and others indicates that the date of approval is the date on which the limitation period starts in cases where an approval hearing is required, as this question has not been the subject of a binding decision, there is no reason to delay issuing contribution proceedings beyond two years after the amount of damages was initially agreed.

Authors

Tom Baker

Tom Baker

Bristol

+44 (0) 117 918 2758

David Williams

David Williams

Leeds

+44 (0)113 251 4844

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